Cycle Trading

Stocks printed a bullish reversal on Wednesday.

Stocks closed below the daily cycle trend line on Monday and delivered bearish follow through on Wednesday to confirm the daily cycle decline. Wednesday was day 33 for the daily equity cycle, placing stocks in their timing band for a DCL. The daily cycle decline should cause the 10 day MA to turn lower before a daily cycle low forms. However, there has been over 1.5 billion Buying on Weakness since stocks began their daily cycle decline. That is a significant amount and makes we wonder if the Fed is not intervening in the market to prevent stocks from continuing into an intermediate cycle decline. Wednesday’s bullish reversal aligns with that scenario. Therefore we will need to watch for a swing low & close above the 10 day MA to signal a new daily cycle.